5 Reasons to NOT Buy a Subway Franchise (2020)

Is a Subway franchise a good investment? How much does an average restaurant cost, and how much can I make? We explore those topics as well as five reasons that may make you reconsider Subway as an investment.

Your total investment to open a new Subway will range between $150,000 to $328,700, be prepared for $200,000 plus. Your payments to Subway will include 8% of your total gross sales as well as 4.5% of your gross sales that goes towards advertising. There are other fees including your local rent/license fee, equipment leases, software maintenance call us for details on those.

As Franchise brokers and consultants we are in a unique position in that we have access to every Franchise Disclosure Document, including the financials, of every franchise out there. We see the failure rates, transfers, average unit volumes, how much an average Subway store generates in revenue, bankruptcies, lawsuits and many other criteria. Thats why it makes sense to call a broker when you are exploring franchises as we have all this information available to provide you.

We also speak regularly with existing Subway franchise owners selling their locations and often hear the reasons behind why they are selling. One of our partners here at franchise.city was also a multi unit Subway owner for a number of years before selling his stores.

So we'll start with what I say when clients ask me "should I buy a Subway franchise?"

First question I ask is why. Why do you want to invest in a Subway. Most of the time we hear: "Because it's busy when I go at lunchtime" or "They make great subs" which may possibly be the worst reasons to invest a couple of hundred thousand dollars! Some say they are getting a "deal" on a resale location, I would be very wary of those, and another popular reason is "Because they are the most successful franchise" more locations than anyone else. But what does that kind of success really mean? It means they have thousands of locations -and what does that mean to you as an individual franchise owner? It means that you will have a competing Subway store very close to your own store. Is that a good thing? No it is not

Then I ask if they have previous food service experience. Most don't. They have visions of traveling the world on luxury cruises while their Subway franchise back home earns them millions of dollars on auto pilot. Allow me to pop that bubble.

If you want your Subway store to do well you will have to work in it. It's a business like any other and is not a magical ticket to wealth and single locations do not make anywhere near as much money as you may think. In fact right on their website when asked how much can you make with a Subway franchise they suggest speaking with "multi unit owners" to see how much you can earn with a Subway. They don't really want you speaking with single store owners because the numbers are low, we'll look at that in a minute.

We all know the good points about Subway, very strong brand recognition, established systems and processes, decent subs, in this video we will look at 5 reasons Subway may not be the best option. (text con't here: https://www.franchise.city/subwayfranchise

Franchise City offers free services to help investors identify, research and acquire the best franchise for their situation based on budget, business goals, operational preferences, exit strategy and more. Over the last 10 years we have helped hundreds of aspiring entrepreneurs make better informed decisions, and avoid making costly mistakes.

You can learn more about our services here: https://www.franchise.city/our-services

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